The US Commodity Futures Trading Commission (CFTC) has obtained a federal court supplemental consent order requiring defendants Peter Son (Son) of Danville, California, and his companies, SNC Asset Management, Inc, and SNC Investments, Inc, to pay a USD5 million civil monetary penalty.
The court also ordered Son’s wife, relief defendant Ann Lee (Lee), to disgorge USD300,000 of ill-gotten gains.
The court’s supplemental consent order, entered on April 19, 2012, by Judge Maxine M Chesney of the US District Court for the Northern District of California, resolves a CFTC complaint that charged the defendants with operating a USD85 million fraudulent foreign currency (forex) scam. The CFTC complaint named Lee as a relief defendant because she received monthly funds as purported wages, although she performed no services for SNC.
The supplemental consent order recognises that an order of restitution in excess of USD60 million was imposed on Son in a related criminal action. The supplemental order follows a consent order of permanent injunction entered by the court on 13 May, 2011, which established the defendants’ liability, and permanently barred the defendants from engaging in certain commodity-related activities and from future registration with the CFTC, among other things.
According to the 13 May, 2011, consent order, the defendants fraudulently solicited at least USD85 million from at least 500 customers to trade forex. The defendants in their solicitations falsely claimed to be operating successful forex trading firms and guaranteed monthly returns generated by their trading, the order finds. These representations, and subsequent fictitious account statements depicting profitable returns on individual accounts, created the false impression that the defendants were trading forex profitably, the order finds. At best, however, only a small percentage of the USD85 million solicited was traded and the defendants’ limited trading resulted in overall losses, according to the order.
Rather than trade on behalf of customers, the defendants misappropriated customer funds to pay purported profits and principal to customers, to pay money to Son’s wife, and for personal expenses such as mortgage payments, country club dues, and homeowner dues, the order finds.
On 9 April, 2010, in a related criminal action, Son pleaded guilty to conspiracy to commit wire fraud and conspiracy to commit money laundering (United States v Peter C Son, No CR 09-00755 DLJ (N.D. Cal. filed July 27, 2009)). On July 30, 2010, Son was sentenced to 180 months in prison. On 25 October, 2011, Son was ordered to pay restitution of USD60,302,886.59 as part of the criminal judgment.